ALERT / FEBRUARY 5, 2026

The United Kingdom introduces reforms for stronger employment rights [Updated]

10 MIN READ

The Employment Rights Bill passed and received Royal Assent on 18 December 2025. As the most revolutionary set of reforms in UK employment law in a generation, the impact on employers cannot be understated and requires extensive pre-planning. The reforms involve a multi-phase implementation process, and a significant amount remains unknown about how they will be implemented in practice. This will present real challenges for employers who must navigate what is required to prepare effectively.

The approved reforms are expected to be implemented in several phases from 18 December 2025 to 2027, based on the government’s proposed implementation roadmap (opens a new window) published on 1 July 2025 (the “Roadmap”). For most of the changes, the final effective dates have yet to be confirmed and regulations are still pending.

Background

The UK government initially published the Bill on 10 October 2024, proposing 28 individual reforms to reshape the employment law landscape. Key proposals included making certain employment rights available from the first day of employment (such as protection from unfair dismissal, family leave and statutory sick pay) and making flexible working the default where practical.

After several rounds of parliamentary debate and amendments, the Bill was passed by the House of Lords on 16 December 2025 and received Royal Assent on 18 December 2025, becoming the Employment Rights Act 2025 (the “Act”).

Key details

Reduced qualifying period for the right to claim unfair dismissal

Currently, employees must complete at least two years of service with their employer before they have the right to claim unfair dismissal. While the original draft Bill proposed a new right for employees to claim unfair dismissal from day one of employment, the Act, as passed, sets out that the minimum of two years of service will be reduced to a minimum of six months.

This change is expected to take effect from 1 January 2027, which means that employees with six months’ service on or after that date will be able to claim unfair dismissal.

Unfair dismissal compensation

Compensation for unfair dismissal is currently limited to 52 weeks’ gross pay or a statutory cap (whichever is lower). The compensatory award cap, which increases in line with inflation every April, is currently GBP 118,223.

Under the Act, both the 52 weeks’ gross pay and statutory caps will be abolished. This means that compensation for unfair dismissal will be uncapped.

The Roadmap does not set out the proposed effective date for this change. However, it is likely that this change will take effect at the same time as the unfair dismissal qualification period change on 1 January 2027.

Day one family rights on paternity and unpaid parental leave

Currently, an employee must work for their employer for 26 weeks before they are eligible for two weeks’ government-funded paternity leave, and for one year before they are eligible for 18 weeks of unpaid parental leave per child or adopted child, up to the child’s 18th birthday. The Act removes the existing service requirements for paternity and parental leave, making these into day one rights.

Currently, employees may only take paternity leave if they have not taken any shared parental leave. The Act removes this restriction so that employees have the option to take paternity leave regardless of whether they have previously taken shared parental leave.

These changes are expected to take place in April 2026.

Bereavement leave

There is currently no statutory bereavement leave, except for parents who lose a child under age 18 or have a stillbirth after 24 weeks of pregnancy. Parents who meet the eligibility criteria are entitled to two weeks of government-funded parental bereavement leave.

The Act grants the government the power to introduce a new right to at least one week’s unpaid bereavement leave. The new right will also apply in the event of pregnancy loss that occurs before 24 weeks of pregnancy. Potential details, such as the necessary relationship with the deceased in order to qualify and the exact length of leave, are expected to follow in regulations. The new right to bereavement leave is expected to take effect in 2027.

Statutory sick pay from day one of sickness

Currently, statutory sick pay (“SSP”) is payable by employers from day four of sickness, and employees need to be earning above the lower earnings limit (currently GBP 125 per week (opens a new window)) to qualify. The Act scraps the waiting period so that SSP will become payable from day one of sickness and removes the lower earnings limit. This means that all eligible employees, regardless of earnings, will be entitled to SSP.

Additionally, while SSP is currently payable at a flat rate (currently GBP 118.75 per week (opens a new window) and expected to increase to GBP 123.25 from 6 April 2026), the Act amends the existing law such that employers must pay SSP at that flat rate or 80% of the employee’s weekly earnings, whichever is the lower.

These changes are expected to take effect in April 2026.

Maternity and statutory family leave protections against dismissal

The Act also contains a provision granting the government powers to make regulations for stronger protections against dismissal of pregnant employees and employees returning from statutory family leave, but the details are left for further regulations. These changes are expected to take effect in 2027.

Stronger flexible working rules

Currently, there are eight permitted business reasons for refusing a flexible working request (which can be found on the UK government’s website here (opens a new window)). The Act introduces an additional requirement stating that any refusal of a flexible working request must be reasonable. An employer must state and explain to the employee what the ground for any refusal is and why their refusal is considered reasonable. This aims to make it easier for employees to challenge refusals of flexible working requests. This change is expected to take effect in 2027.

Menopause support action plans

The Act also introduces the requirement for employers with 250 or more employees to create action plans to support employees going through menopause.

Details of such action plans, such as the content, publication, and frequency, are expected to be set out in future regulations. This change is expected to be introduced on a voluntary basis in April 2026, before coming into force in 2027.

No outright ban on zero hours contracts, but tough rules on guaranteed hours

Zero hours contracts are a type of contract where an employer does not guarantee a minimum number of working hours for the employee. Workers on zero hours contracts are typically called in to work only when there is a need, and they are paid only for the hours they work. These are commonly used in casual, gig or “on call” work.

The Act does not completely ban zero hours contracts but introduces a key new requirement that employers must offer guaranteed hours to:

A worker who has regularly worked for a number of hours on a zero hours contract; or
A worker on a “low hours” contract who has worked more than the minimum number of hours specified in the contract.

The guaranteed hours offer will need to reflect the hours the worker regularly works over a reference period, and the offer must be made after the end of each reference period.

Definitions and operational details are expected to be set out in further regulations to address key points. These include the length of the reference period (12 weeks has been previously proposed), the threshold of “low hours”, and conditions on the number and regularity of those hours. These changes are expected to take effect in 2027.

New right to reasonable notice of work schedules and proportionate compensation

The Act introduces a new right to reasonable notice of a shift an employee is required to work, including the time, day and how many hours are to be worked. There is also a new right to reasonable notice of any change or cancelled shift. What is “reasonable” notice will depend on the circumstances, but regulations will set out a specific minimum time.

Additionally, an employer will be required to make a payment to workers each time that the employer cancels, moves or curtails a shift at short notice. Details will be clarified in regulations, but compensation will be proportionate to the cancellation, movement, or curtailment.

These rights will apply to workers employed on a zero hours contracts, as well as workers who do not have a set working pattern. These changes are expected to take effect in 2027.

Gender pay gap reporting tweaks

Currently, employers with 250 or more employees are required to report annually on their gender pay gaps, but there is no legal obligation for employers to create or publish an action plan to address such gaps (though many employers already do, and employers are encouraged by the government to do so).

The Act introduces a new requirement that employers with 250 or more employees must publish “equality action plans” for closing their gender pay gaps. Additional details on the requirements for such plans are expected to be set out in further regulations. This change is expected to be introduced on a voluntary basis in April 2026, before coming into force in 2027.

The Act also introduces a new requirement for employers which use outsourced contract workers, to identify the suppliers or employers of these workers (e.g., staffing company, employment agency, etc.) when publishing their gender pay reports, though they will not need to go as far as to include contract workers in their pay gap calculations. Implementation of this requirement will depend on timelines for broader changes related to pay gap reporting, in the upcoming Equality (Race & Disability) Bill (not yet published).

Employer action: ACT

The Act represents a balance between employer and employee interests. Many of the most-publicized measures focus on strengthening protections for individuals on casual and low-paid contracts, while others will be important for individuals seeking to change jobs while starting a family. For most employers, however, the most consequential reforms are those relating to unfair dismissal, flexible working, and zero hours contracts.

From a practical standpoint, as the reforms are extensive and involve several phases of implementation, employers should start working closely with their advisors on the following steps:

Identify which specific reforms apply to their workforce and operations, particularly those taking effect in the near term.
Assess the practical implications for HR processes and systems, benefits, employment contracts, employee handbooks, and risk management practices.
Evaluate the potential impact on workforce planning, staffing models, and cost projections.
Develop an internal implementation roadmap that prioritizes the steps required for compliance and aligns with the expected reform timeline.

As most of the implementation dates outlined in the government’s Roadmap remain provisional, employers should closely monitor the release of any related implementing regulations, which will confirm final effective dates and provide additional operational details.

Written in collaboration with:

Denise Lake

Head of Associate Relations (International), Lockton International

denise.lake@lockton.com (opens a new window)

Antony Thompson

Technical Lead VP, Lockton UK

antony.thompson@lockton.com (opens a new window)